Importance of Effective Staffing Processes

Going global was considered to be a great achievement few years ago, but today, it is part of a company’s survival strategy and rather an essential element to de-risk the business from a single country shock. Going global has become an increasingly important business strategy because of that most businesses face challenges of localized economic policies and competition. The advances in information technology and telecommunication that scholars consider it as second revolution have caused tremendous changes in global business and increased the volume of trade between nations. Multinational companies have been playing major role in the process of moving goods and services around the globe. When companies go global and operate in different countries, policies relating to employee hiring, training, compensating and maintaining are largely affected and human resource managers are required to have a global perspective of business to effectively formulate and implement human resource policies.

This piece of research paper addresses the importance of effective staffing process for a company when operates in other countries and explains main elements of international human resource management in relation to hiring, training and compensating the employees. This paper explains main modes of global staffing in relation to managing expatriates and analyzes various selection factors for global operation.

Need for effective Staffing for Global Operation

In recent days, managers of large multinationals have been realizing the significance of human resource practices to ensure the profitability and competitive advantages of their business. Human resource management has become more involved in helping international organizations and these organizations necessarily require to develop global strategies with major focus to hire, manage and retain best employees in order to ensure competitive advantages.

As Briscoe, Schuler and Claus (2008) stated that the impact of a company’s international activity on human resource varies according to various factors like stages of internationalization, the global nature of the particular industry and specific choice of the firm etc (p. 29). Large companies that have been operating in its home country often suddenly become global and as a result its existing human resources start working in different conditions with no previous experiences in international operation. Likewise, companies need to hire, train maintain and retain talented employees to be able to work in multinational conditions.

Stahl and Björkman (2006) stressed that global staffing has become a critical issue in international management for the following reasons:-

There has been growing awareness that the success of international business mainly depend on recruiting the qualified senior and other managers.

Staffing is more complex in international contexts,

The performance of expatriates has become a problem and empirical evidences have shown that poor performance of expatriates in international firms are more costly in both human and financial terms.

Global staffing has become important due to the need for MNCs to develop multicultural international workforce (p. 141).

Staffing for Global Operation

In global staffing, companies need to choose from various types of global staff members and need to have specific approaches and strategies to global staffing. Global staff members are selected from among three different types: expatriates, host-country people and third-country nationals. Expatriate is a person who belongs to the country in which the organization is headquartered and not a citizen of the country in which the company operates. A host-country national is a citizen of the country in which the subsidiary company is located. A third-country national is a citizen of a country, but works in another country and employed by an organization headquartered in a third country (Mondy, 2008, p. 150).

As Deresky (2011) pointed, a firm’s managerial staffing in other countries, depending on its stage of internationalization, and situational factors falls in to one or more of the basic four staffing modes, namely ethnocentric, polycentric, regiocentric and global approaches (p. 329). Each staffing modes present different and unique HR management challenges as well as opportunities. More specifically, when an organization uses citizens of different countries for its staffing, different tax laws and other significant HR-related factors may apply and therefore it highly recommended that HR professionals need to be knowledgeable about the laws and customs of each country that its workforce belong to. The four different modes of international staffing are detailed below:

Ethnocentric approach

When companies hire expatriates to staff their high-level foreign positions, it uses ethnocentric approach. The company focuses on using home-country nationals to staff most of its senior managerial positions for its global operation. The basic perception of this approach is that home-office perspectives and issues are likely to take precedence over local perspectives and issues and therefore these expatriates will be more effective in representing the views of home-office (Steers and Nardon, 2006, p. 277).

Deresky (2011) emphasized that ethnocentric approach is more likely to be used when an organization is at its internationalization stage or at strategic expansion. It is used mainly for filling the key managerial positions with people from headquarters, who are known to be parent-country nationals (p. 329). In the ethnocentric organization, home based policy, practice and even employees are viewed as superior and same time foreigners are often viewed as second class citizens. This approach is very appropriate when the company is in its early stage of setting up foreign subsidiary and there is greater need for control (Scullion, 2006, p. 18).

Parent-country nationals are well familiar with company’s specific goals, policies, technology and operation and they now the procedures to get things done from the headquarters. It is one of the major advantages of ethnocentric approach. More over, this approach is normally used when a company faces inadequate local-skilled managers. This approach is a strategy to fill this gap and develop international managerial skills (Deresky, 2011, p. 329). This approach requires relatively little effort by headquarters to monitor and recruit home country people for filling higher managerial positions. This approach provides quite broad experience for home country managers in relation to improving their long term career.

This approach has many disadvantages as well. It may inhibit the opportunities and development of the talent of local managers as they have less up-ward mobility and this causes decrease to their loyalty to the subsidiary (Deresky, 2011, p. 329). More over, employee commitment to the organization may be negatively impacted as local managers feel they are trapped under a glass ceiling and with less chances of moving to the top of the firm’s managerial positions (Steers and Nardon, 2006, p. 277). Expatriates in foreign countries have been found to be less effective as well (Deresky, 2011, p. 329).

Polycentric Approach

A polycentric approach staffing policy and management philosophy oriented toward staffing positions with local talent. A polycentric-oriented firm staffs its foreign subsidiaries with host country nationals and its home office with parent-country nationals (Gary, p. 379). Deresky (2011) noted that polycentric approach, in which local managers from host-country nationals are hired to fill important positions in their own country, is more applicable when implementing a multinational strategy (p. 329). As these managers are normally familiar with local culture, competitive demands of the local market, the major foreign subsidiary is usually some what independent. Local managers are its major advantages.

The major advantages of this approach includes a strong familiarity of business operation and management with local social custom and culture, language fluency and costs that are relatively less than in an expatriate assignment. There wont be foreign adjustment problem for an employee or his dependent family members. Though it is a multinational country, the heavy use of host-country nationals throughout the countries it operates from top management to lower positions can significantly win the support and confidence of local government and people because they see that its operation is benefiting its people (Vance, Charles and Paik, 2010, p. 173). This approach is good in those countries that have a policy and legal requirement that a firm’s employees must be comprised of a specific proportion of its citizens (Deresky, 2011, p. 329).

When a firm takes polycentric approach, it is found that the business faces difficulty in coordinating activities and goals between subsidiary and parent company. another disadvantage is that the managers ion headquarters of the multinational companies will not gain necessary overseas experience required for higher positions in the firm (Deresky, 2011, p. 330).

Regiocentric Approach

With regiocentric approach, a firm’s recruitment for its international operation is done on a regional basis (Deresky, 2011, p. 331) and the managers are selected on the basis of ‘the best in the region’ with international transfers that are restricted to regions (Scullion, 2006, p. 23). Bogardus (2004) stressed that regiocentric approach takes a somewhat larger operational view than that of polycentric approach as it covers a trade region like European Union and allowing managers to move between business units in various countries of the same region (p. 235). In this staffing approach, a mix of Parent-country nationals, host-country nationals and third-country nationals can be used depending on the specific needs of the company.

The regiocentric approach has recently become more popular as many multinational companies are choosing to organize in regional basis. One of the main advantages of this approach is that it reduces the need for costly duplication of support services (Scullion, 2006, p. 23). Wood (2009) argued that most multinational companies regiocentric rather than truly international and majority of their sales and operations are concentrated on the region (p. 300). When it comes to the corporate level, the regiocentric approach is may be limiting as ethnocentric approach as multinational companies are failing to understand the features of the regions outside of their home-region. The regional structure may also lead to the mergence of silo-mentalities as regional managers will be trying to hold and protect their top talent within the region rather than allowing them to develop outside their region (Wood, 2009, p. 300).

Geo-centric Approach- Global Approach

The geo-centric or global approach to staffing is method by which the firm seeks to place best-qualified person in to each position regardless of the country they belong to. The business thus focuses on building an international management team and its members are free to move in to the geographic area (Bogardus, 2004, p. 235).

As Peng (2008) noted, the geocentric approach can be said to be ‘Color-blind’ because the color of the passport of the manager doesn’t matter. This approach focuses on finding the most appropriate and efficient managers from Parent, or Host or Third country nationals (p. 440). In geocentric approach, the firm requires to consider various important factors like cost, foreign business practice and cultural variations.

The global staffing approach considers best managers and they are recruited within or outside of the company. Their nationality is never considered. The main advantages of geocentric approach include its provision of greater pool of qualified managers and this in turn helps develop global executive base. When third-country nationals are staffed, they cause bringing more cultural flexibility and are likely to be skillful in more than one language than parent-country nationals. One of the main advantages is that the company can reduce its expenses by recruiting managers and employees from a country where normal pay is relatively less than some other countries (Deresky, 2011, p. 330).

Selection Process for Global Assignments

Cultural Adjustments

Cultural awareness

Cultural adaptability

Diversity acceptance

Global experiences

Personal Characteristics

Emotional stability

Ambiguity tolerance

Risk taking

Stress coping

Organizational Requirements

Organizational knowledge

Technical abilities

Job-related skills

Communication skills

Language capabilities

Non-verbal awareness

Coaching and listening

Conflict-resolution skill

Personal/family concerns

Personal life demands

Family considerations

Financial & economic concerns

Career development

Selection factors for Global Employees

Source: Mathis and Jackson, 2007, p. 250 The selection process for an international operation must provide real pictures of the working conditions to which the employees are to be sent. In international staffing, the HR managers thus require to prepare a comprehensive analysis of the job to be done in relation to the skills and talents of the employees to be recruited and selected. Some of the more significant factors to be considered in analyzing the suitability of an employee for a given task or job are his ability, personal characters, communication, ethical and moral perspectives etc. The multicultural perception of the managers or employees to be selected are also highly important. The figure above depicts main factors to be considered in selecting global staffs.

Mathis and Jackson (2007) emphasized that cultural adjustments, personal characteristics, organizational requirements, communication skills and personal or family concerns are key competencies for successful global employees (250). Many companies in recent days focus on pre-employment screening to ensure their knowledge in the specified area and to know their experience in the same field.

Training and development for expatriates

Expatriation alone may not yield success, but they are to be trained and developed. Employees at all levels and at all field almost require training to improve their knowledge and enhance their work-experiences. When it comes to international staffing, training is more critical element to the organizational success. Expatriates inevitably experience unique cross-cultural encounters that they were probably not prepared by any pre-departure training. Pre-departure training helps expatriates foresee various cross-cultural encounters and prepare accordingly (Kühlmann, 2001, p. 12).

Expatriate-managers and employees are found to have multiple relationships and they require to maintain relationships like family relation, internal relation, relation with host government, relation with headquarter, local and global relation etc. Because of these factors, it is important that expatriates need to be trained with cultural training, language instruction and getting accustomed with every-day life (Deresky, 2011, p. 337).

Cross Cultural Training

Cross-cultural training is perhaps more complicated than language or instructional training. The cross-cultural training is aimed at helping the expatriates improve their skills and ease adjustments to the new cultures and customs by making them able to reduce culture-shock. Some expatriates experience anxiety and despair about their un-knowingness of behaving to an unfamiliar culture. This culture-shock can be overcome with the help of cross-cultural training.

Mead (2005) detailed that a cross-cultural training aims to teach a) what values are important within other culture, b) how that particular culture is being reflected in history, politics and economics and c) how such cultural values can be expressed in behaviour and attitudes (p. 400). The expatriates who attended cross-cultural training will be able to improve their social relationship, management styles, managing structures, strategic planning and management skills, knowledge in newer technology use etc.

Conclusion

This piece of research work has highlighted the importance of global staffing and analyzed four basic modes of internal staffing, namely ethnocentric, polycentric, regiocentric and geocentric. Advantages and disadvantages of each of these approaches are detailed. This paper has addressed basic factors that can determine how successful are international employees and are required to be considered in selecting international employees. training and development, especially with cross-cultural training are more critical factors when it comes to the employee-development of the expatriates. This paper has highlighted the importance of training and development to the expatriate employees and managers.